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An Analysis on the NASDAQ’s Potential for Sustainable Investment Practices during the Financial Shock from COVID-19

Rachel Shields (), Samer Ajour El Zein () and Neus Vila Brunet ()
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Rachel Shields: Research Center, Geneva Business School, Rue de, La Voie-Creuse 16, 1202 Genève, Switzerland
Samer Ajour El Zein: Economics and Finance Department, EAE Business School, Calle d’Aragó, 55, 08015 Barcelona, Spain
Neus Vila Brunet: Faculty of Economics and Social Sciences, Universitat Internacional de Catalunya, Calle de Immaculada, 22, 08017 Barcelona, Spain

Sustainability, 2021, vol. 13, issue 7, 1-20

Abstract: There is a growing demand for sustainable business practices and for sustainable and impact investment as has been signaled by the Sustainable Development Goals ratified by all the United Nations members. However, there is not that much evidence on how sustainable investments perform during crises compared to regular investments. This paper investigates if sustainable investments within the NASDAQ have a lower volatility rate when reacting to a significant global crisis such as the COVID-19 pandemic. It groups the shares of businesses with Corporate Social Responsibility (CSR) practices that are ranked 70% or higher given by CSRHub, Inc. and compares it to business shares with the lowest-ranked CSR business practices at 30% or lower. The top 30% and bottom 30% CSR stocks’ volatility will be predicted using variations of the GARCH model. The top 30% CSR stocks of the NASDAQ had a lower rate of volatility for a global crisis than the bottom 30% CSR stocks. Technology is the only sector whose top 30% showed higher volatility. However, the top 30% of companies in the Health Care and Utilities sectors show a higher increase in returns and a lower drop in returns. These results signal the higher uncertainty associated with some cutting-edge products and services offered by the top 30% of technology companies and the preference for more established companies that offer higher quality services when it comes to satisfying basic needs such as health and utilities in difficult times.

Keywords: GARCH; NASDAQ; Corporate Social Responsibility; sustainable investments (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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